Cheaper than gas heating!

By Steven Heath, Technical Director
January 18, 2024

Today, an explainer for those designing energy efficiency and heat policy of a great case study titled ‘Running my heat pump for half the cost of a gas boiler’ by Rachel Lee. As multiple Government policies consider a role for on-site home efficiency measurement (retrofit & new build), it’s worth unpicking how the study’s cheap bill was achieved, and vitally whether current policy design has a chance of delivering a similar outcome. 

Firstly, the study’s ‘Cheaper than Gas’ framing is a great ‘outcome’ focused way to view policy – energy efficiency & heat. It could & should be a ‘lens’ when designing policy to ask ‘will our policy design work with the grain of this aspiration or against it’?

Different policies – and we have many - come with ‘legacy design challenges’ that mean some things are difficult, or impossible, to do. But individual policies – most of which are being redesigned this year - can look at the different components that make up the heating bill in this study and ask ‘what’s in the gift of our policy area to support the relevant component that enabled affordable heating in this home’? It’s important because they are the same components that will enable affordable heating in all homes. An ‘Affordable Heat as a Service’ enabling lens if you like. A key focus is that electric heating bills will be as dependent on ‘time of heating’ as ‘how much heat’ a home needs.

First up, there is a busy graph to understand – it’s necessarily busy as each bit represented on the graph works together to get the occupant really low heating bills. I’ve broken down each element of that graph with the x axis showing a cold winter’s day (24hrs) in the author’s house.

1. The area under the wavy yellow line = total ASHP kWh heat output for a 24-hour period on a cold day to maintain set indoor temperatures (purple line)
  • This is a function of how efficient the whole house fabric is (in reality rather than SAP estimated obviously)


2. The area under the wavy blue line = total ASHP kWh electricity required to deliver that heat for the winter’s day
  • The average gap between the blue and yellow wavy lines over a year = heat pump seasonal efficiency (sCOP)

  • The blue line hovers between 2-4 kW (a kettle runs at around 2-3kW)


3. The Heat Pump performance in the study home
    • A high sCOP is vital for lower bills, but also simply knowing the COP is crucial to operating a smart heating strategy (if you get high heating bills, a service provider needs to know if they are driven by fabric, heat pump set up or occupant use)

    • A low COP compromises two elements of ensuring a low energy bill;

      • More electricity to deliver required heat so higher kWh electricity need over the year

      • More exposure to periods of the day at higher kWh price points

    • From an energy efficiency policy intervention perspective, you want:

      • the area under the yellow line (heat demand) as low as possible…

        • so fabric improvement measures that genuinely deliver at a whole house level (think ‘Pay for Performance’ policy built on in-situ measurement)

      • …and from a heat policy perspective you want the gap between the yellow and blue line as large as possible  

        • a high measured heat pump efficiency to deliver the required heat…so is there a heat meter in all heat pumps to tell the user, or user’s service provider, the COP?


    4. The green line = the changing 30 min ‘time of use’ electricity unit price while the right-hand y axis represents both temp and p/kWh …I think)
    • The author has written an algorithm to ‘sit between’ the heat pump operation & time-of-use tariff (not complex if the heat pump manufacturer permits easy interaction which is not necessarily the case)

    • The algorithm looks at the 30-minute forward electricity price and internal home temp and operates a smart heat strategy around minimum internal temp set points (so home temp never drops below comfort settings)


    5. That smart operation means peak electricity prices can be avoided 
    • A ‘set back internal temp’ built into the algorithm can ensure indoor comfort doesn’t fall below a limit.

    • The algorithm can judge when to use heat to ensure that comfort is maintained as cost effectively as possible.

      • (see revealing misstep in the study. A market must develop that reveals the competency of algorithms to deliver that cost-efficiency)


    6. The purple line = internal temp
    • The slow speed of internal temp drop while 0ºC outside supports this ‘high electricity price avoidance’ strategy.  

    • That slow temp drop is a result of both efficient fabric and home thermal mass – again in-use fabric measurement technologies should learn a home’s ‘reaction to external temp’ or ‘heat decay curve in different temperatures’.

    • If heat leaks out too quickly, no smart algorithm can avoid price spikes (so any performance gap undermines the strategy)

    • A period of low wind electricity generation & cold temp will see price spikes above those in the graph.

    • As more people move to electric heating, the greater the policy imperative to avoid those peak times (as heating will represent the top layer of electricity demand in any annual peak)

    • In less-cold windy periods, the half-hourly price will likely drop well below that shown in the graph – especially at non-peak times.

    To recap, the study home’s low annual space heating bill – ‘halve the price of gas heating’ - will be a function of:

    • a) How many kWh total heat demand needed for comfort – area under yellow wavy line.
    • b) How many kWh total electricity demand to deliver that heat – area under blue line.
    • c) How quickly, or slowly, the internal temp drops in cold weather over daily peak cost times– the descending purple line when the heat pump is not operating.
    • d) The tariff rates at different times – the green line
    • e) How ‘clever’ the algorithm is at avoiding peak prices and taking advantage of cheap ones.
    • f) The occupant set back temperatures to maintain internal comfort.

    So, if the national policy objective in a ‘Heat in Buildings Strategy’ was ‘roll-out electric heating but with a lower than cost-of-gas promise’, individual policies should combine to manage the elements listed above. This aspiration can be inferred in current policy (kind of) if it isn’t yet clearly stated. To date, some policies are taking positive steps in managing the different components of the heating bill. But none yet combine to support this ‘Affordable Heat as a Service’ proposition.  

    Policy state of play – what can be done to support ‘cheaper than gas’ heating offers.

    • An aspiration in Wave 2 was ‘heating costs should not increase if moving a home from gas to electric heating’.

    • But this outcome was assessed using SAP heating guesstimates. The above ‘Affordable Heat as a Service’ components weren’t supported. Understanding and managing components a), b) and c) would make an ideal ‘digital strategy’ bolt-on.

    • Wave 3 SHDF should require in-use measurement of home heat demand (e.g. Heat Transfer Coefficient) as a success criterion. Where heat pumps are installed, measured efficiency must be accessible.

    • We proposed a similar ‘digital strategy’ in SHDF projects to social housing providers built on in-use performance fabric measurement. But it was a level of complexity too far and too much of a step away from the existing SHDF success criteria.

    • A ‘lower cost than gas’ framing in Wave 3 where electric heating is delivered will absolutely get occupants and social housing providers engaged with the scheme. More so than a sales pitch limited to ‘here’s some insulation and an unknown heating system’.

    ECO Pay for Performance (PfP)
    • ECO is the first policy to commit to rewarding measured reduction in heat demand - component a) above - rather than the installation of measures.
    • It will incentivise suppliers to reduce the area under the yellow line for homeowners (if suppliers choose to engage given PfP’s voluntary nature).
    • It will also slow the speed of heat loss over peak demand times – component c) – allowing homes more flexibility to avoid peak price electricity times.
    • The sensor kits & algorithms that measure home efficiency improvement will also likely support that smart heat pump operation having learnt the fabric’s response to weather – component e). 
    • But, ECO PfP as proposed will still limit the power to install measures as it won’t be in the power of retrofitters to propose a cost-effective whole ‘house as a system’ retrofit. Uplifts and measure eligibility will still constrain what can be offered.
    GB Insulation Scheme
    • For those off-gas households a ‘cheaper heating than the cost of gas’ offer is a dream outcome.

    • Like ECO, GBIS is leading the way preparing to consult on a Pay for Performance model. But the ‘single insulation measure’ constraint clearly doesn’t allow a ‘house as a system’ approach either.

    • To control the area under the yellow line, you want to make sure the walls (including party wall), the roof, ideally the floor if accessible, are efficient. You don’t want to base decisions on whether an historic SAP rating tells you those elements of the house are efficient. You’d also rather the scheme didn’t tell the retrofitter that you can do one insulation measure, but not the others, while you are there.

    • I’m conscious schemes come with constraints, but it is worth looking at those constraints and considering which can be flexed to support ‘Affordable Warmth as a Service’ type offers. Householders can only truly benefit from flexing that scheme design.

    Boiler Upgrade Scheme /  Clean Heat Market Mechanism
    • There is currently no requirement for a heat meter to be installed - I think? - in either scheme.

    • Nor is there a requirement for all heat pumps supported to be interoperable with smart controls (although this may have been in the Energy Act?)

    • We need to get consistently high efficiencies (COPs above 3) if we aren’t to undermine our electricity system or see too many homes with high heating bills. To do this, a first step is measuring the efficiency or COP.

    • Lastly, Heat Pumps can’t be smart operated away from peak times if algorithms can’t access them to smart operate them.

    Future Homes Standard  
    • Great to see Real Performance measurement proposed in the consultation - q40 for those who haven’t yet read the consultation.

    • Also, great to see real performance measurement described as a key solution to inconsistent new home quality and a mechanism to resolve any ‘performance gap’ in new homes.

    • But the FHS could genuinely deliver the homes of the future by enabling them to operate as shown in the study.

    • The really costly bits will already be there;

      • The heat pump / electric heating in most homes

      • The genuinely efficient fabric – if, and only if, the ‘voluntary’ element drives real performance measurement at scale and closes any ‘national performance gap’.

    • The bits missing are the awareness of a high COP (needs a heat meter) and the requirement of heat pump to interact with smart controls (common protocol / language).

    • The FHS represents a great opportunity not to be missed.

    So please do read the study, and consider responses to current, and pending, consultations on how all home occupants – those getting a heat pump, an insulation retrofit or buying a new home - can get a similarly great outcome.

    Running my heat pump for half the cost of a gas boiler… | LinkedIn